If you get a letter saying you owe tax and it doesn’t look right – take a breath. It’s more common than you might think and there are simple ways to put it right.
It could be a simple mistake.
Sometimes mistakes happen. HMRC might not have credited a payment you’ve already made or something has been recorded incorrectly.
That can often be sorted with a phone call using the number on your Statement of Account. Or you can find other ways to contact HMRC. It’s worth checking before assuming the worst.
Payments on account may be too high.
If your income has gone down, the payments on account included in your bill could be more than they should be.
Payments on account are advance payments towards next year’s tax bill. If they don’t reflect what you’re earning now, you can ask for them to be reduced.
You can do this online, by phone, or by completing form SA303. You’ll need to give a realistic estimate of what your tax bill will be for the year.
If HMRC have estimated your tax.
Sometimes HMRC estimate your tax bill because you haven’t sent in a tax return after several reminders. This is called a “determination”.
Determinations aren’t always accurate. If you act quickly and follow the right steps, it’s usually possible to correct them. But there are time limits. In most cases, you need to send the missing return within four years of the end of the tax year.
Until you do, the estimated amount stands. That means penalties and interest can build up, even if the figure is wrong. So it’s good to act quickly if you can.
Once your return is submitted, HMRC will recalculate the tax. You’ll then be asked to pay the new amount, plus any interest and penalties that still apply.
Bringing everything up to date.
HMRC’s Debt Management team won’t just look at what you owe now. They’ll check whether all your tax returns have been filed.
If returns are missing, they can continue taking action – even if you’ve paid the amount first demanded – because there are penalties for filing late.
Sending in any outstanding returns as soon as you can often makes a big difference. We regularly see tax debts reduce once the correct figures are in place.
Don’t ignore it – check it.
If you’re unsure whether the amount is right, don’t ignore it. There may be a way to put it right.
There are places to find help if you need it. HMRC have an Extra Support Team if you have conditions or circumstances that you need extra help with, including difficulties using the phone.
Or you can find out more about the help we offer if you need professional tax advice but are unable to access it.